Red River Waste Solutions lender blasts plan support agreement

By Sarah Lizee

Olympia, Wash., May 17 – Red River Waste Solutions, LP lender MUFG Union Bank, NA objected to the company’s plan support agreement and filed a motion seeking appointment of a Chapter 11 trustee or examiner, according to court documents filed Monday with the U.S. Bankruptcy Court for the Northern District of Texas.

MUFG said that the company seeks to “impose another major setback in a case that is best characterized by stagnation and a complete unwillingness” on Red River’s part to engage with MUFG, which is the company’s largest secured and unsecured creditor.

The lender said that if the plan support agreement motion is approved, the debtor will have the power to ignore the court’s prior directive and eliminate MUFG from future negotiations, and instead only work with the official committee of unsecured creditors, and the debtor’s “out-of-the-money” equity holders.

“The result is described in the PSA – a Chapter 11 plan that will be proposed in bad faith, unfairly discriminate against Union, is not in the best interest of the estate and is otherwise not confirmable as a matter of law,” MUFG said in its objection.

“This is wholly improper, particularly considering this court has advised the debtor that it is time to start taking Union’s interests into consideration.”

MUFG said the plan support agreement requires a “complete abdication of fiduciary responsibilities” from both the debtor and the official committee of unsecured creditors by “saddling them with conflicts of interest that require them to leave value on the table for creditors” by barring them from exploring other value-maximizing options.

They would also be required to settle the estate’s potentially most lucrative claims and causes of action, as well as Chapter 5 causes of action against the minority general unsecured creditors, without any input from MUFG, who stands to benefit the most from the claims and causes of action, the lender said.

MUFG said the agreement would give minority general unsecured creditors and out-of-the-money equity holders inappropriate control over the debtor’s causes of action moving forward.

The lender said that if the plan support agreement motion is approved, appointment of a Chapter 11 trustee would be appropriate because it would be in the best interests of the creditors and the estate.

The Dripping Springs, Tex.-based waste management company filed bankruptcy on Oct. 14, 2021 under Chapter 11 case number 21-42423.

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